The deadline for filing Income Tax Returns (ITR) is fast approaching, with taxpayers urged to submit their returns by the end of the month to avoid penalties and fines. The Income Tax Department has set a July 31 deadline to file ITR for FY 2023-24.
Despite speculation and demands for an extension, the deadline for filing ITR is unlikely to be pushed further. Last year, too, a large number of taxpayers were caught off guard when the deadline was not extended.
Taxpayers are advised to prepare and file their returns on time to avoid penalties and fines.
What happens if you miss the ITR deadline
According to CA Chirag Chauhan, failing to file ITR before the deadline might have “serious consequences” this year.
Here’s what you need to know:
No old tax regime option
If you have opted for the old tax regime, missing the deadline could lead to losing its benefits.
- If you miss the deadline, you will be automatically shifted to the new tax regime — the default option.
- The old tax regime offers several deductions and exemptions, such as those for investments and specific incomes. The new regime does not provide these benefits, leading to potentially higher taxes.
- Switching to the new regime might increase your tax liability, and you may also have to pay interest on the outstanding tax amount.
The most significant impact will be on those who prefer the old tax regime. Missing the ITR deadline means losing the option to choose the old regime, which many are unaware of. This new provision applies to FY 23-24
Late fee/penalty
Even if you miss the deadline, you can still file a late return, but this comes with penalties:
- Late filing fee: Under Section 234F of the Income Tax Act, a late filing fee of Rs 5,000 can be imposed. If your income is below Rs 5 lakh, the fee is reduced to Rs 1,000.
- Interest on outstanding tax: According to Section 234A, you will be charged interest at a rate of 1 per cent per month, or part thereof, on the outstanding tax amount from the due date.
No carry forward of loss and setoff
Filing your ITR on time is necessary if you have incurred losses from the stock market, mutual funds, properties, or business.
- Carry forward losses: Filing your ITR on time allows you to carry forward losses to offset them against future income, which reduces future tax liabilities.
- No carry forward: Missing the deadline means you cannot carry forward these losses, which may lead to higher taxes in future years.
If you fail to file Income Tax Returns before 31 July, can result in serious consequences this year –
1) No Old Regime
Individuals who have opted for the old tax regime and
have already paid taxes and submitted investment and income proofs according to this regime, missing…— CA Chirag Chauhan (@CAChirag) July 27, 2024
Ensure you file your ITR before the deadline to avoid these consequences.